What hope for markets in the US-China trade talks?

Posted - January 10 201910:59

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What hope for markets in the US-China trade talks?

Most Asian markets have opened lower after China and the USA wrapped up trade talks without indicating if they made progress on resolving a dispute over Chinese technology policies that has the world's two biggest economies embroiled in a bruising trade war.

Meanwhile on the trade talks, sources said the two sides were still far apart from United States demands for structural reforms in China.

World markets rose on increasing optimism that the two sides would be able to hammer out a deal ahead of a March deadline and avert further import tariff hikes.

"Listen, I think in the end markets are not really going to care very much about the details of any deal that's struck as long as a deal is struck and directionally looks like we are going toward deescalation rather than escalation", said Jimmy Pethokoukis, fellow at the American Enterprise Institute. It is the first time that officials have met for face-to-face talks since President Trump and President Xi agreed a 90-day ceasefire in December.

China says it is trying to protect its own economic interests and has accused the US of violating global trading rules.

One apparent breakthrough this week was an announcement by China that it would approve the imports of five new varieties of genetically modified crops, a decision for which United States farmers and businesses had waited years.

"The extension of the talks indicates that both sides are serious about this consultation", he said. These include expanded Chinese purchases of American products, greater protections for U.S. intellectual property, constraints on Chinese industrial policy, and enforcement and verification of follow-through by China.

The Trump administration also wants Beijing to buy more American goods to narrow a yawning trade gap and allow foreign players better access to the Chinese market.

But a statement released earlier by the Office of the United States Trade Representative (USTR) said the talks were held with "a view to achieving needed structural changes in China with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft of trade secrets for commercial purposes, services, and agriculture".

US Commerce Secretary Wilbur Ross signalled on Monday that there was a "very good chance" of reaching an agreement.

"The positive news around the trade talks is giving a boost to risk assets it's what the global economy needs to see, said Chris Scicluna, head of economic research at Daiwa Capital Markets in London".

"I don't speak for them obviously", Cook told CNBC in reference to the Trump administration.

The US smartphone maker has felt the pinch of the bruising trade spat, and warned that 2018 revenues would miss its forecast - in large part due to a slump in iPhone sales in China. China responded by imposing penalties on $110 billion of American goods, slowing customs clearance for US companies and suspending issuing licenses in finance and other businesses.

Global financial markets retreated late previous year, largely over concerns about the economic impact of a protracted trade war. "Their economy's not doing well", Trump told reporters at the White House before boarding the Marine One presidential helicopter.

A Chinese paramilitary policeman stands guard at the main entrance gate of the Ministry of Commerce in Beijing, Wednesday, Jan. 9, 2019.

Oil prices jumped, helped by the hopes of easing trade tensions between China and the USA, while OPEC-led crude output cuts also provided support.

Asian stocks surged at the conclusion of the trade negotiations.

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